Spanish telecoms group Telefonica has started preparing the sale of its $3.6 billion stake in its listed Czech unit, three sector bankers closely following the process but not directly involved said on Monday.

Telefonica (Madrid, Spain), which aims to cut its debt to under 47 billion euros ($64 billion) by the end of the year, has sold a number of assets to pay down borrowings, including its Irish business O2.

Analysts have long tipped Telefonica Czech Republic as an asset the group might shed. Telefonica reported net debt of 49.8 billion euros in mid-year results.

Two of the sources said Czech investment group PPF, owned by the country's richest man Petr Kellner, was the most likely buyer.

PPF recently sold its telecoms arm, which will compete as Revolution Mobile under new ownership, but seems keen to get back into the sector. It considered joining a 4G spectrum auction now underway in the Czech Republic as a new entrant but did not, and so buying Telefonica's business would be an alternative way into the market.

One of the two sources said a private equity fund could snap up Telefonica Czech Republic if PPF does not, adding that while he thought Russian telecoms groups would be interested in the asset, they could face political opposition.

A spokesman for Telefonica in Madrid declined to comment.

Bloomberg reported earlier on Monday that Goldman Sachs and Societe Generale were helping Telefonica find a buyer for the stake, though sources consulted by Reuters were unable to confirm which banks had been mandated.

Societe Generale and Goldman Sachs declined to comment.

Telefonica currently holds 69.41 percent of the Czech company, which has a market value of $5.2 billion, according to Thomson Reuters data. Telefonica Czech Republic's share price rose 6.4 percent to 322.50 Czech crowns on Monday.

The company faces long-term pressure on margins due to growing competition in the Czech telecoms market, where it faces rivals T-Mobile (Bonn, Germany) and Vodafone (UK, Newbury) as well as so-called virtual operators that rent network space.

The former fixed-line monopoly is fighting back by trying to grow its data business over its fixed-line portfolio and by expanding its smaller business in Slovakia.

The business has a total client base of 9.3 million in the Czech Republic and Slovakia and reported a 7 percent decline in half-year revenues to 930 million euros.

(Additional reporting by Robert Hetz in Madrid and Jan Lopatka in Prague; Editing by Mark Potter)